the allocation of resources within the policy area, the achievements and costs of various policy programmes and whether value for money is being achieved.

Recommendations were also made to the policy secretaries of the ‘resource’

branches (Finance and Civil Service). acceptable levels of public expenditure,

For Finance they to manage annual

are expected to determine resource allocation exercise

and to ensure resources are used economically, effectively Service, they should manage general grades of staff and

and efficiently.

For the Civil

develop

and

monitor

service-

wide

personnel

policies.

Privatisation

and

contractorisation

was

also

considered

in

the

report, but it did not become a major policy thrust As Tsang (1995: 5) remarks, ‘most of the public the private sector are already being so provided’.

of public sector reform in services that can be better

Hong Kong. provided by

Despite the rhetoric contained in the PSR report, the period 1989-91 saw very little change. Huque et al (1998: 16-17) record some hiving-off of civil service functions to quasi-non-government organizations beginning in 1991 with the establishment of the Vocational Training Council and the Hospital Authority. Six Trading Funds were also established under the Trading Fund Ordinance in March 1993 (Cheung 1998: 105).

However, Treasury attempted

PSR quickly ground to a halt when McLeod came in as in 1989 who was not an enthusiast of UK managerialist to recover the ground as PSR ‘had led to too much freedom’.10

Secretary to

the

reforms and

he

There is a range of interpretations on offer for the introduction of PSR in 1989. The general view is that the report was a result of the pressures to democratise and for the bureaucracy to maintain its legitimacy (Cheung 1992, Lam 1995 and Lau 1997). As Lui (1994: 18) points out ‘failure to attain efficiency would not only be administratively undesirable but also might threaten the political authority of the unaccountable bureaucrats’. Although Cheung (1992: 116) argues that PSR was ‘engineered from the top down by the government, without any apparent corresponding demands from the outside’, Huque (1996: 121) argues that economic problems in the early 1980s followed by strikes and demonstrations prompted the report ‘to ameliorate similar situations’. Chow’s (1992) warnings concerning ‘1997 phobia’ and the ‘prevalence of mediocrity’ may also have prompted the report as a kind of corrective action to counter these tendencies. Burns (1994: 243) adds that, ‘squeezed by an ambitious public works programme on the one